In tablet stack, it’s iPad above Kindle, Nook

Analysis: Apple is like basketball’s Larry Bird in his prime

SAN FRANCISCO (MarketWatch) — Among pro basketball fans, there’s a famous story about former Boston Celtic great Larry Bird that took place just prior to the three-point shooting contest during one All-Star Game weekend back in the 1980s.

Bird, known for his shooting skills, could put the rock in the basket from almost anywhere on the court. Few were surprised when Larry Legend walked into the locker room, surveyed the competition and said: “So, which of you’s coming in second place?”

Thirty minutes later, Bird won the contest and made his point.

The tech version of the Larry Bird Guarantee can be seen in the market for tablet devices. Given the position that Apple Inc.
AAPL, +1.72%
has, Amazon.com Inc.
AMZN, -0.13%
and Barnes & Noble Inc.
BKS, -0.65%
are likely to be playing just against each other for second place as long as Apple rules the game.

Apple Chief Executive Tim Cook claimed as much at a company event on Oct. 4, when he said the iPad was the “undisputed” king of tablets, and cited industry research that said 75% of all tablets sold were iPads. It’s hard to dispute this when the company has sold more than 40 million iPads in 19 months that its tablets have been on sale.

So, what are Amazon and B&N to do?

For starters, they’re moving away from simply making e-book readers. Beginning Nov. 15, Amazon will start selling the Kindle Fire — which incorporates the functions of a Kindle reader with access to digital movies, apps and the Web — for $199. B&N said Monday that its new Nook Tablet — which comes with access to Netflix, Hulu Plus and Pandora services, in addition to email and Web capabilities and more than 2.5 million books — will go on sale for $249 starting Nov. 18. Both are based on Google Inc.’s
GOOG, +0.42%
Android operating system. Read more about Barnes & Noble’s new Nook Tablet.

In doing so, both companies effectively have benched the stand-alone e-reader. Yes, both Amazon and B&N will (at least for a while) continue to sell their traditional Kindles and Nooks that just serve up books, newspapers and magazines, but the future of the e-reader is definitely in the tablet category.

According to Michael Walkley of Canaccord Genuity, the future is likely to remain Apple’s to own. “New entrants such as Amazon could disrupt the [market] dynamics into holiday sales,” he said, but added that the 7-inch screen models like those from Amazon are more of a threat to other Android-based tablet makers than the iPad.

The analyst forecast iPad sales of 14 million in the fourth quarter of 2011, and that Apple will claim about 65% of the market for tablets this year.

By comparison, Walkley estimates that Amazon will claim about 3% of the tablet market in 2011, with sales of about 2 million devices. B&N’s Nook Tablet hadn’t been announced when Walkley made his forecasts on Nov. 3.

Granted, Amazon and B&N are starting from zero when it comes to tablets, while Apple has almost a two-year head start on the e-reader leaders. Something has to be said for essentially starting from scratch.

But there’s also something to be said for experience. Larry Bird showed that to all comers on the court. Now Amazon and Barnes & Noble are going to find out if they have what it takes, or are just pretending to play the same game as Apple.

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